AMC Entertainment Q3 Earnings Preview: Apes Face Potentially Weak Quarter Riddled With 'Release Slate Holes'

AMC Entertainment Holdings Inc AMC is set to report its third-quarter financial results on Tuesday.

The Kansas City, Missouri-based company is expected to report a third-quarter net loss of 24 cents per share on quarterly revenue of $961.09 million, according to Benzinga Pro.

In the second quarter, the theater chain reported mixed results. AMC turned in a second-quarter net loss of 20 cents per share, which narrowly missed estimates for a loss of 19 cents per share.

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The company reported quarterly revenue of $1.166 billion, which beat estimates of $1.16 billion.

"Looking ahead, we could not be more bullish about the probability of significantly improving operating results for AMC, beginning with Q4 of 2022 and continuing in 2023," AMC CEO Adam Aron said in the second-quarter release.

Aron did not mention the third quarter when talking about significantly improved operating results. He did note that July food and beverage numbers appeared to be the biggest single-month figure for its U.S. theaters in company history, but he warned of a slowdown in the third quarter. 

"For full transparency, there is a dearth of new big movie titles being released in August and September, so things will slow for several weeks, but then comes Q4," Aron added.

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Analyst Take

Wedbush analysts reiterated AMC with an Underperform rating and a $2 price target on Thursday, highlighting potential weakness in the theatrical business.

"The volume of content has not yet returned to pre-pandemic levels, and release slate holes such as August through October were largely driven by production delays over the last year," Wedbush analysts wrote in a note to clients.

Although the analyst firm acknowledged that AMC has the cash position to "weather the slump," the stock is still too expensive. Wedbush has even awarded the stock a premium multiple due to its 90% plus retail ownership and still expects underperformance.

"However, as APE shares are trading under $2 per share and should trade in line with shares of AMC, we would recommend a pair trade," Wedbush said.

At the beginning of August, AMC declared a special dividend in the form of APE, or AMC Preferred Equity Units APE. One APE was distributed for each share of AMC class A common stock outstanding at the close of business on Aug. 15. APE units have trended lower since inception. 

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AMC Price Action: AMC has a 52-week high of $34.33 and a 52-week low of $5.47. The stock was up/down
Photo: Paul Sableman from Flickr.